Expected Value and Life
I played poker for a living for several years. Poker is full of variance. Variance is another way of saying luck or chance. There’s a lot of chance in the game of poker, although it is a skill game. What that means in practice is that you can make the wrong decisions and be rewarded or the right decision and be punished. This drives a lot of people crazy. Humans aren’t really built for the variance. We’re not good at losing. Losing in evolutionary terms meant death, so we’re hard-wired to be risk-averse and also we like to seek patterns (where there may be none) and make stories. As a poker player, this can be good or bad. If you win early and often, without any knowledge or a clear understanding of why you did what you did and the long-run chance of the play you made, then you’re likely set up for failure later. How much later depends on variance. Put another way, if you understand the why behind what you’re doing then you can make a play and make a decision and be fine with the outcome (irrespective of whether the actual hand in question ends up going your way or not) and this is truly the hardest “skill” to master and/or overcome in not only poker, but also in life. This thinking is called +EV thinking. You’re making a decision based on all of the factors you have at hand and the result or outcome ON THIS PARTICULAR OCCASION is irrelevant. What we’re looking at instead is the expectation of reward should we be able to replay this exact scenario over a hundred thousand times. If you have a chance to flip a coin and win $3 for every flip you win and have to pay out $2 every flip you lose you should be comfortable flipping this coin ALLLL DAYYYY. However, having said that, for the general human condition the outcome on THIS PARTICULAR OCCASION IS very important. And being able to sort between useful information and useless information is critical to success in poker. This is what poker players call +EV decisions and I think this type of thinking is what the successful people use in all areas of life, not just in a game of cards, to stay mentally strong and to keep going and to basically take all of those small edges each day which eventually compound into greatness.